House prices have stalled as potential buyers wait to see what’s in store for their wallets in the upcoming budget, despite cheaper borrowing costs.

While cheaper mortgages have boosted the property market, fears over tax hikes have made some buyers think twice, particularly those eyeing up luxury homes in London.

The latest figures from property experts Savills show that prime property values in central London dipped by 0.7% over the last three months. This contrasts with areas outside central London, where prices inched up by 0.2% – driven by buyers who are moving out of necessity rather than choice.

This hesitation amongst those buying high-end properties is largely down to concerns over the looming budget. 73% of agents surveyed by Savills cited prospective tax changes as the biggest worry for their clients, followed by general market uncertainty (36%).

Lucian Cook, head of residential research at Savills, explained: “While we would usually expect the top end of the market to be the first to react to improved market conditions, concerns over what the budget may hold have made buyers more cautious, especially in the most discretionary prime markets.”

This caution is particularly evident in areas popular with wealthy international homeowners, such as prime central London, where there are fears of changes to tax rules for non-domiciled residents.

Outside the capital, the picture is similar. Across all prime regional markets, prices fell by 0.5% in the last quarter. Seaside properties, often popular as second homes, have been hit hardest, with prices plummeting by 5.2% over the past year.

This drop is likely fueled by a combination of factors, including concerns about potential council tax increases and changes to capital gains tax.

However, Savills remains optimistic that the market will pick up, particularly with the Bank of England expected to cut interest rates. Cook believes that further cuts to mortgage rates in the coming months are expected to gradually improve buyer sentiment more broadly.

Here’s how prime property prices have changed:

Area	Last 3 Months	Last Year
Prime Central London	-0.7%	-1.1%
Outer Prime London	+0.2%	+0.9%
Prime Regional	-0.5%	-1.7%
Prime Coastal	-1.8%	-5.2%